After six straight months in the red, Rich is ready to call it “a blood bath” for cannabis stocks. Despite the downward trend, he maintains that this presents a unique buying opportunity for investors waiting on long-term industry growth.
The Canadian Marijuana Index peaked in mid-March at about $110.67. Since then it has steadily and consistently trended downwards, reaching $51.70 as of this morning. Industry analysts keep hoping that the sector has found a bottom, but unfortunately it shows no immediate signs of turning around.
Still, some cannabis stocks are showing growth. With red stretching across the board, it’s worth taking a look at why some companies are in the green, and if they’ll be able to affect the rest of the sector. An industry can’t continue to fall forever, and, as Rich notes, eventually, cannabis stocks will be feeling the green once again.
Canopy Growth Up 1.3%
Canopy Growth Corporation (TSX:WEED) (NYSE:CGC) stock opened at $31.85 and now sits at $32.21. It may not be much, but when almost every other cannabis stock is down, a growth of 1.32% is something for pot investors to hold onto.
“Canopy Growth has now climbed out of the red,” Rich says, noting the hope that this news offers.
As a claimant of the title “World’s Biggest Cannabis Company,” Canopy Growth tends to set a precedent in the industry. When the company posts losses, or when analysts have a bearish outlook on it, it tends to cause a bit of panic in the sector.
This is exactly what happened last week when WEED stock dropped 9% after Oppenheimer analyst Rupesh Parikh warned that Canopy investors should ready themselves for major losses in the coming years.
According to Parikh, between March 2019 and March 2021, the company will lose more than $500 million. This wasn’t received well by WEED investors or industry-wide investors, and the index took an expected tumble.
But with Canopy back in the green today, we might begin to see a bit of faith restored to cannabis stocks. We’ll have to wait and see.
Sunniva Up 10%
Sunniva Inc. (CSE:SNN) (OTCQB:SNNVF) is the only cannabis company showing significant growth today. It opened at $1.30 and now sits at $1.42, making its total growth for the day so far just a hair above 10%.
So what makes SNN stock different than everything else? What’s making investors think they’ve found a safe haven with Sunniva when all other cannabis stocks are nosediving?
Well, nothing, frankly. Or at least, nothing was announced today to give Sunniva an immediate, positive outlook.
But the company has been showing steady signs of growth over the last month. On August 29, the company released its Q2 Financial Results, which showed revenue increase from $1.6 million in the first half of 2018 to $4.5 million in the first half of 2019.
On September 10, Sunniva announced the sale of Natural Health Services for $9 million. Later that week, it also closed the third tranche of a finance agreement for gross proceeds of $325,000.
This makes the company surprisingly cash-rich, and with its impressive revenue increases, investors could be thinking that Sunniva has everything it needs to weather a storm that’s bringing all of its contemporaries down.
The State of Cannabis Stocks
As with Canopy Growth, we’ll have to wait and see how SNN stock might affect the rest of the sector, but until cannabis stocks definitively turn around, Rich will be here to let his community members know which stocks to watch, and which stocks should be avoided.
If you liked this article, make sure to check out Rich’s other videos, like when he profiled four pot stocks that can turn a profit. You’ll also want to watch Rich’s picks for the top ten pot stocks in September.
Are you feeling the pressure to sell? Think you’ll hold out a little longer? Let us know your thoughts about the sector in the comments below.
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